Here are this mornings headlines:

COP26 has begun in Glasgow and over the next 12 days we’re hoping to get some big announcements on the future of the planet and ultimately how much money is going to be thrown at the problem. If you didn’t see it on Friday, a couple of our team here wrote a really good background piece on the summit entitled how to save the world, on a budget which is well worth a read.

Hamilton Court FX has the story

UK vs EU
World leaders may be rallying behind a collective cause with COP26, but there is definitely going to be some UK-EU tension in the coming days, with Emmanuel Macron giving an ultimatum to the British government ‘issue our vessels fishing licenses within 24 hours, or you won’t be able to land your catches on European shores’ . The rhetoric is firm on both sides, but then both leaders need to appear to be taking a tough stance for their own domestic popularity. We’ll find out today whether the UK is to acquiesce to the demands…


A German tabloid has accused the ECB of destroying people’s earnings and savings by allowing a rise in inflation to go unchecked. The newspaper, Bild, calls Ms Lagarde “madame inflation” and signals what could be growing discontent amongst the EU’s largest and wealthiest contributor that the status quo cannot remain. The ECB chose to keep rates on hold last week, despite inflation accelerating at its fastest rate for more than a decade, with the bank of the same belief/hope that inflation is going to ease back next year.


Inflation in Electronics
One area where inflation might not come back into line as soon as people had hoped is electronics, or rather anything that involves a microprocessor. Forecasts for the resumption of business as usual have been pushed out to 2023 as lead times for chips is now at about 22 weeks, up from 13 weeks under normal circumstances. The pinch is already being felt in corporate results, with Apple saying it lost about $6bn in revenues due to product shortages, whilst Porsche has a backlog of 10,000 electric Taycan orders that it can’t fulfil. One person’s loss is another’s gain though, and that person is Elon Musk; Tesla exceeded a market cap of one trillion dollars last week, making it more valuable than the combined worth of the nine largest auto manufacturers! The company has managed to avoid supply chain issues and is seeing record sales, as well as big corporate orders – such as the 100,000 from rental company Hertz – that are providing great headlines at a time when everybody else’s PR could use some work.


JCB & Hydrogen
Another vehicle manufacturer making headlines is JCB: The plant machinery company has signed a deal with Australian green hydrogen producer, Fortescue. The deal will see JCB import about 10% of the hydrogen that Fortescue produce, though some are questioning how green the overall product will be if it’s manufactured in Australia through entirely renewable means but is then liquified and shipped to the UK on tankers that will burn fossil fuels to get it here. Still, the bigger picture is that with a ready supply of hydrogen the government and private sector can hopefully make the long-term infrastructure investments that are needed to scale the utility.

A tentative continuation of the infrastructure theme; the US senate could vote on Joe Biden’s infrastructure and social spending bill tomorrow, and Biden is confident it will get across the line. It would be great personal PR for the president, who would love to be able to tell everyone at COP26 all about it. Separately, the US and EE have reached a deal to try and promote more sustainable steel an aluminium production by reducing tariffs that each other place on their products. Additionally, they want to welcome other countries into the agreement in the hope that they can encourage greener steel production and in turn prevent other countries (China) from dumping cheap steel into their markets.


This Week

This week is going to be busy, with early headlines out of COP26 combined with the heavy data flows that the first week of the month brings. FX markets had lent more support to the Dollar last week, despite other asset classes being generally risk-on, though this might have been month-end related trade flows. Other news last week was that I’ve decided to ride the whole of 2022’s Tour de France in support of Cure Leukaemia. Here’s a link to one of the chats I’ve had with Geoff Thomas about the event, with more to follow.


Have a great week


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